Parliament has been asked to approve the doubling of Switzerland’s contribution to an International Monetary Fund (IMF) monetary crisis bail-out mechanism. The government wants the maximum contribution to be raised from CHF7.7 billion to CHF15 billion ($15.3 billion).
The IMF’s “New Arrangements To Borrow” (NAB) fund was set up in 1998external link to issue emergency loans in cases where the global monetary system was under threat. At its annual meeting at the end of last year, IMF members agreed to double the potexternal link from $250 billion to $500 billion.
This is to compensate for the number of outstanding loans that will be rolled over into NAB’s next five-year operational period, starting in 2021.
The financial crisis of 2007/8 spilled over into monetary policy with many central banks having to take extraordinary measures to stabilise national currencies and economies.
On Wednesday, the Swiss government formally asked parliament to approve Switzerland’s doubling of contributions to NAB. It points out that monetary problems in other countries have a destabilising effect on Switzerland by attracting investors to the safe haven franc.
“Through its involvement in the NAB, Switzerland is underlining its importance as a systemically important and credible partner for the Bretton Woods institutions, and reaffirming its role in the international financial and monetary system,” read a government statementexternal link.